HIMARAYA Co., Ltd.

Sales of winter goods such as skis and snowboards are heavily influenced by weather conditions, including snowfall levels. The Group is working to increase the proportion of sales from non-winter goods, but weather fluctuations may affect its financial position and operating results. Given the nature of the sporting goods retail business, seasonality risk is a structural challenge.

New store openings and floor space expansions exceeding 1,000 square meters of sales floor area are subject to regulation under the Large-Scale Retail Store Location Law, and there is a risk that store openings or expansions may not proceed as planned during the coordination process. For the Group, which positions multi-store expansion as a pillar of its growth strategy, delays in store openings could be a negative factor in achieving business plans.

The Group pays substantial security deposits and guarantee money to lessors when leasing stores, and there is a risk that these amounts may not be refunded if the lessor's creditworthiness deteriorates after store opening or if the Group withdraws from a store due to early termination of a lease. Although the Group makes decisions taking into account the lessor's creditworthiness at the time of contract, it cannot completely prevent changes in circumstances after store opening.

Borrowings from financial institutions include those with variable interest rates, and in a rising interest rate environment, interest expense will increase, expanding the financial burden. The means to fully control interest rate fluctuations are limited, and the structure is such that trends in market interest rates directly affect business performance.

Part of the Group's merchandise procurement is conducted through direct trade import purchasing, and there is a risk that sharp fluctuations in exchange rates could increase procurement costs beyond expectations, reducing gross profit. Although the Group partially hedges this risk through forward exchange contracts, there is no guarantee that foreign exchange risk can be completely avoided, and the impact on profitability may become apparent when the yen depreciates.

The Group holds personal information obtained through internet sales, point cards, and similar means, and part of this management is outsourced to an external management company. The Group is working on continuous improvement through establishing a personal information protection management system, employee training, and internal audits, but if information were to leak, it could adversely affect the Group's financial position and operating results.

If impairment processing becomes necessary for low-profitability stores or held assets whose substantial value has significantly declined, this may affect the Group's financial position and operating results. For the Group, which operates a multi-store network, the emergence of unprofitable stores can lead to impairment losses on fixed assets, becoming a factor in temporary deterioration of profit and loss.

The Group manufactures products at its own production facilities, and if a product defect leading to a large-scale recall or similar event occurs, this could affect business performance through the incurrence of substantial costs and a decline in credibility. The Group addresses this through strict quality control at production facilities and by taking out product liability insurance, but the risk cannot be completely eliminated.

The Group employs a large number of part-time workers, and responding to legal regulations concerning part-time employment, including clarifying the assurance of equal and balanced treatment, may lead to an increase in personnel expenses. Given that, as a retail business, personnel expenses constitute a major cost component, stricter regulations could directly affect profitability.